Derek Powazek exposes the meaninglessness of the already overused tripe 'If you're not paying for the product, you are the product'. "But we should not assume that, just because we pay a company they'll treat us better, or that if we're not paying that the company is allowed to treat us like shit. Reality is just more complicated than that. What matters is how companies demonstrate their respect for their customers. We should hold their feet to the fire when they demonstrate a lack of respect. And we should all stop saying, 'if you're not paying for the product, you are the product', because it doesn't really mean anything, it excuses the behavior of bad companies, and it makes you sound kind of like a stoner looking at their hand for the first time." Nailed it.

Here's the deal. Aside from comparing his opposition to stoners right off the bat, he's also arguing against all sorts of meanings he thinks this "tripe" means:

This is new or unique to the internet. No one argues that.

You’re either the product or the customer - he uses a newspaper, a physical product, to negate this. The whole 'tripe' refers to services where the users' data - personal details, content, media, interaction with other users is used to sell ads and is sold to third parties, not a physical product with ads.
However, even a physical product that isn't selling ads is be less biased or impartial and might represent it's users better. By selling ads, any product or service sacrifices some integrity of itself, and, by proxy, of its users for the advantage of making more money (or reduce price to the user, returning us to the aforementioned 'tripe').

Companies you pay treat you better.
I wish. The best treatment I get these days is from fellow users of FOSS project I use personally and for work. However, not related to the 'tripe', as its not how they treat me, but what they use me for.

So startups should all charge their users.
There's a valid argument saying that the free/ad supported medium is forcing its practitioners towards more unethical behaviour. However, this isn't what the 'tripe' is about, but rather a warning to users of free services and a reminder - the service giver needs to make money from somewhere.

Finally: "And we should all stop saying, “if you’re not paying for the product, you are the product,” because it doesn’t really mean anything, it excuses the behavior of bad companies, and it makes you sound kind of like a stoner looking at their hand for the first time."

This manages to be both derogatory, and to show that the writer missed the whole point in the saying. As someone said regarding Orwell's 1984: "Its not supposed to be an instruction manual". Same here, its not an excuse, but a warning. It means that the price of using free services that are created by for-profit organisation is that the service giver now needs to generate revenue from other channels, mainly selling his data, that is his users data, that it yours and mine statuses, images, likes and shares, comments and posts, addresses and phone numbers to its real customers, the advertisers, making the users the product. It is full of meaning and very potent, see the recent Instagram fiasco.